The newly formed Ministry of Justice came into being today, assuming control for prisons and probation from a Home Office split amid claims it was "not fit for purpose".
Lord Falconer, who will lead the ministry, will immediately be faced with an emerging prison crisis, after the prison population reached 80,674 this week - 400 short of capacity.
Ministers are thought be considering emergency measures to ease overcrowding. As its last act the Department for Constitutional Affairs (DCA), which has been amalgamated into the Ministry of Justice, yesterday denied media reports that Tony Blair had vetoed plans to reduce the number of people given custodial sentences.
The ministry also faces further criticisms carried over from the Home Office. The Conservatives have warned splitting the department risks exacerbating the problems that beset successive home secretaries.
Shadow home secretary David Davis warned the division will worsen existing problems while creating new ones, pointing to the potential for communication breakdowns.
"Many of the crises in the Home Office have been caused by different agencies not talking to each other - the last thing you should do is put these agencies in different departments," he argued.
The shadow secretary for constitutional affairs further accused the government of "rewarding failure" with the move. Oliver Heald claimed the DCA cannot cope with its existing functions and its enhanced responsibilities are a "recipe for disaster".
The Liberal Democrats have been more supportive of the move, having long argued for restructuring.
However, Lib Dem justice spokesman Simon Hughes raised concerns about the implication of the change.
"Improvements in the court system must not be sacrificed as a result of the failures of government prison policy," he warned.
"With courts struggling to meet extra demand and re-offending rates continuing to rise, the Ministry of Justice must not resort to the populist gimmicks that have characterised the output of the Home Office over the last decade," Mr Hughes added.
Home secretary John Reid was instrumental in pushing through the reforms, after warning the Home Office was "not fit for purpose" in its previous form. However, he has surprised many by announcing he will resign when Mr Blair leaves office.
With the prime minister expected to announce his resignation within the next 48 hours, Mr Reid will have just six weeks to oversee the restructured Home Office.
Lord Falconer indicated today he will remain in position. He told the BBC's Today programme that he would continue the post within a Brown government if asked.
The lord chancellor is expected to outline his first policies later today and it is widely expected they will address prison overcrowding. However, Lord Falconer dismissed media reports over the bank holiday that he will order the early release of 3,000 prisoners.
Home Office probation minister Gerry Sutcliffe has transferred to the new ministry, along with David Hanson from the Northern Ireland office who will become a new minister of state. They join the former DCA ministerial team; Harriet Harman, Baroness Ashton, Bridget Prentice and Vera Baird.